U of I trustees approve FY13 budget

The U of I Board of Trustees approved a $5.4 billion budget for FY 2013.

The U of I Board of Trustees on Friday approved a $5.4 billion budget for fiscal year 2013 — a 3.7 percent increase in day-to-day operating costs.

Overall, the budget for the fiscal year, which began July 1, is up $383.3 million, or 7.6 percent, from FY12. But that total includes an estimated $227.6 million increase in state-controlled payments for employee health-care and pension benefits, which rose more than 28 percent for fiscal 2013. A large portion of that increase stems from past underfunding of pensions by the state and is required by statute.

Excluding those payments, the operating budget rose $155.6 million, or 3.7 percent, to cover day-to-day operating costs for the university’s three campuses.

Budget revenues include a $667 million direct state appropriation for operating costs, down $42.5 million — or 6 percent — from FY12.

State funding, which once accounted for nearly half of the operating budget, has been on a steady decline and now covers just 12.3 percent of the university’s day-to-day costs.

University President Robert Easter said the reduction was “anticipated and planned for” as the state continues to wrestle with a lingering budget shortfall.

“Through prudent financial planning and operating efficiencies, we are continuing to advance the academic and research programs that have made the University of Illinois a world leader in education and innovation.”

State funding and tuition revenue comprise the bulk of the budget’s unrestricted funds used for the university’s educational mission including salaries and academic support costs. Unrestricted funds increased $40.1 million for fiscal 2013, up 2 percent from the year before.

Revenue from restricted funds rose by $115.5 million, or 5.1 percent.

Restricted funds include research grants, hospital and medical service plan revenues, gifts and auxiliary operations such as campus housing and food services. Those funds must be spent for the specified purpose or in line with donor restrictions.

The budget reflects about $50 million in cost reallocation from a university-wide initiative launched in 2009 that has streamlined administrative costs. Avijit Ghosh, special adviser to the president, told trustees that he expects savings will grow to $60 million annually by 2014.

The budget includes a second consecutive year of pay increases for university faculty and staff, who received no raises in fiscal years 2010 and 2011 and an average 1.5 percent increase in fiscal 2009. The merit-based raises will average 2.5 percent, down from 3 percent last year.

Easter said the raises are “small but critical” to attract and retain top faculty, who are vital to the university’s teaching and research missions and in high demand by colleges across the nation and beyond.

Other budget highlights include an increase of $46.6 million, or 6.2 percent, in sponsored projects — primarily research funding — and $62.3 million for hospital operations and medical services, up 9 percent from a year ago. Total sponsored research for 2013 will be $813 million, up 6.5 percent from $765 million in fiscal 2002.

The university will receive more federal research funding than any university in Illinois in fiscal 2013, and its federal funding is more than all of the other public universities in Illinois combined.

The board also approved the university’s request for state operating funds for fiscal 2014, which begins July 1, 2013. The proposal seeks $749 million, up $81.5 million — or 4.9 percent — from fiscal 2013.

The request is the first step in the annual budget process, and will be submitted to the Illinois Board of Higher Education and the State of Illinois for consideration.

In other business:The board approved a new $104 million Advanced Chemical Technology Building at UIC, which will support leading edge, interdisciplinary research involving faculty from biology, chemistry and physics.

The state-of-the-art facility will foster research activity including drug discovery, neuroscience and nanoscience, generating new innovative commercial technology that will advance society, and create jobs and economic growth in biopharmaceuticals and other areas